Do Market Exclusivity Extensions StimulateTransformative Pharmaceutical Innovation?

Aaron Kesselheim, M.D., J.D., M.P.H.Assistant Professor, Harvard Medical School

Director, Program On Regulation, Therapeutics, And Law (PORTAL)November 22, 2013

akesselheim@partners.org

Alternative or Additional Incentives for Drug Development

Cautionary tales

• Prescription Drug User Fee Act

• Orphan Drug Act

• Pediatric Exclusivity

Prescription Drug User Fee Act of 1992

• Limited FDA resources, length of FDA review time attacked by:– Activists seeking earlier access to HIV/AIDS drugs

– Mfrs complaining that delays reduce market exclusivity time, increase R&D costs

• PDUFA deadlines: NDAs to be acted on within a year of submission (“standard review”) or 6 months (“priority review”)– Decreasing FDA review times extended market

exclusivity period by allowing patent-protected new drugs to reach the market sooner

Transient effect of PDUFAon new drug approvals

Munos, NRDD, 2009

Unintended consequences

Olsen, J Health Econ, 2008;

Carpenter et al., NEJM, 2008

• Drugs approved closer to the administrative deadline more likely to have safety-based withdrawal

• Drugs receiving faster reviews have higher risk of adverse reactions

Orphan Drug Act of 1983• For conditions affecting fewer than 200,000 people

in the US, provide three primary incentives:– 1) federal funding of grants and contracts to perform

clinical trials of orphan products;– 2) a tax credit of 50% of clinical testing costs; and– 3) an exclusive right to market the orphan drug for the

approved use for seven years from the date of marketing approval

What role does Orphan Drug exclusivity play?

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• 7 year market exclusivity period presumed to contribute to rise in orphan drug approvals

• Data: not so– Overall

ODE>patent terms for 40% of drugs approved 1985-2005

– Case studies: only occasional cases where ODE identified to keep competitor off market

Kesselheim and Sampat, 2013

Years from approval to final orphan exclusivity expiration

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Another perspective:When is Orphan Drug exclusivity granted?

• Sample of 15 orphan cancer drugs approved 2004-10

• Received orphan designation median 2.4 years before approval (IQR 1.2-2.7 years)– Delay administrative hassle until determine that end product will be

marketable?

– Identify whether their product will be useful in an orphan disease relatively late in the process?

– Role of the market exclusivity incentive in driving drug development?

• Most approvals occurred in limited number of cancer subtypes and drug classes– 3 renal cell, 3 acute lymphocytic leukemia, 3 myelodysplastic

syndrome

Kesselheim et al., JAMA, 2012

Public health concerns

• Complicated access to approved orphan drugs

– Despite substantial “push” incentives [tax breaks, research funds], orphan drugs expensive

• Gaming system

– Strategically position drugs as orphans

– Result: Tested in fewer patients and greater potential for off-label use

Pediatric Exclusivity

• Motivation– Few drugs being developed or studied specifically for

pediatric patients because of smaller market• Children have important physiological differences from

adults• Drugs frequently used in children without supporting clinical

trials• Children receive treatments that were ineffective or even

dangerous

• FDA Modernization Act of 1997, §111 – Add 6 mos. market exclusivity to a drug’s patent-

protected period if manufacturer conducted study of the drug’s effect in pediatric patients

Success on some measures…

• By 2007, >300 studies, >115 products with labeling changes for pediatric use

– New dosing

– Dosing changes

– Pharmacokinetic information

– New and/or enhanced safety data

– Information on lack of efficacy

– New formulations

– Dosing instructions extending the age limits in the pediatric populations

… but not on others

• Focus on popular adult drugs not on drugs with pediatric importance

• Subpar quality

• Not published in literature

• Delayed until near end of ME period

• Studies in “easier” pediatric populations (older children) vs. test in variety of subjects

Over-incentivize

• Ratio of over 10 to 1 net economic benefit as compared to cost of trials (Li et al., JAMA, 2007)

– In some drug classes, as high as 17 to 1

• Was goal to obtain the pediatric exclusivity incentive, rather than to conduct clinically meaningful tests in reasonable time frame?

Pressing public health need:Antibiotic innovation

• Offer longer exclusivity periods?

– US GAO: 25-30 yr patents for antibiotics for MDR bacteria

– 2012 FDASIA: extend data exclusivity period for new antibiotics and antifungals by 5 yrs

Systemic antibacterials approved

by FDA (1980-2009)

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Outterson et al. JLME 2013

Alternative solutions• Better funding for basic science

– Open innovation model

– Prizes

• Directly link incentives to desired health outcomes

– Reimbursement linked to public health impact

• Variable, transparent market exclusivity periods linked to actual investment